Date post: | 28-Nov-2014 |
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Business |
Upload: | joe-medved |
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Geoff Allen on Startups
Mistakes, Learnings and other Musings
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Attitude First
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Build Companies on Fundamentals
• Crazy, irrational valuations are anomalies – For every YouTube and Bebo, there are innumerable
of money-losing, hype-driven failures
• Just focus on building a great business – Based on a solid business model with long-term earnings potential
“Built to Flip”
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Use (and love) your Own Offerings
• Use it as a consumer – Don’t make excuses for
your own products
• Don’t be afraid to scrap components – Nothing is sacred
• If you don’t who will? – If you can’t, find someone
who isn’t afraid to be critical
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Don’t (always) Listen to your Customers
• After all, you’re the entrepreneur – If they knew better, they would have invented it themselves
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Beware of Glamour
• “Rock Star” execs – Trust but confirm
• Awards are a tactic – Important, yes – but not the
end goal
• “Sexy” customers aren’t always great customers – Be careful what you give
away…It could be the market (precedent)
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Listen to Analysts/Media with a Grain of Salt
• Again, you’re the entrepreneur – If you believe an analyst
knows the market better than you do, you’re in real trouble
• They are called “stories” for a reason – Write your own
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Be Capital Ef!cient
• Know your core competency – Focus, focus, focus on that
• Make quick, small bets – Iterate quickly before scaling – Data wins
• Invest in Great People
• Outsource everything else – HR/Payroll (Administaff),
Hosting (Amazon), Mail/Docs (Google), Bugs/Schedule (Jira/Pivotal), Accounting (Quickbooks Web), 800# (PhonePeople), etc.
• Capital = stored choices
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Clean Cap Table & Balance Sheet
• Avoid early pitfalls – Trading equity for professional
services – Poor (or no) shareholder
agreements; messy/unclear rights – Arbitrary ownership stakes – Lack of documentation – Lots of individual angels (use an LP)
• Important to be “investment easy” – Don’t underestimate the value of
being easy to finance – Investors have only so much time
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Know that Dilution & Value are not Equal
• Don’t’ be dogmatic – The focus is on value
• Control rests with those who generate success – This is irrespective of
ownership
• IPOs are dilutive by nature – Bring on the dilution!
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Understand your Investors’ Businesses
• They have investors, too – They are in a specific asset class – know it
• They don’t want to run the company – So don’t fret about it – Investors want financial leverage,
not to be operators
• #1 Goal – Keep your interests aligned – Understand their objectives, expectations,
timelines and capital reserves
• Not all investors are alike
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Mediocrity leads to “The Living Dead”
• Indecision is the Enemy – Slow decision is worse than no
decision
• Often from unclear bets – Unmeasurable, murky feedback
• Failure is a temporary state – Just another data point
• “The Living Dead” – Won’t succeed, but won’t fail
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Be Honest & Open
• “I don’t know” is OK – That’s why you have a team
• You only have one reputation – The market is ruthless
• Investors are on your side – “Good news, bad news, just
give me the news”
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Thank You!